How Online Lenders are Reshaping the Industry

Technology has revolutionized many industries. Several industries have been significantly transformed, such as retail, media, branding, marketing and advertising. Some industries are undergoing an extensive churn. It was only a matter of time before technology and entrepreneurs reshaped the lending industry. Banks and non-banking financial institutions have been rigid for a very long time. The lending industry has never been the easiest or the simplest by any stretch of imagination.

Millions of people have struggled to secure loans, dealt with average or poor credit score, been turned down for essential funding and those who did succeed in their quest for some financing had to overcome daunting odds. The lending industry has rarely changed or evolved for the benefit of the borrowers. All of that is now changing without any contribution of the traditional lending industry. Fintech or financial technology is poised for a sea change as the following companies rewrite the rules. These companies are exploring myriad ways to make it easier and simpler to apply for, obtain and repay loans, thereby making the whole process much less stressful.

Prosper

Prosper is a fintech company championing peer to peer lending. Peer to peer lending does not require one bank or a particular financial institution to lend you money. It pools funds from multiple individual lenders and offers a loan to a borrower. There are many private lenders that participate in such peer to peer lending. Some major lenders are also exploring such networks. Peer to peer lending has been one of the defining concepts of financial technology. It empowers people to lend and earn a return on their investment. It empowers borrowers to secure different kinds of loans for all types of purposes at reasonable rates of interests and more lenient terms of repayment. Peer to peer lending is not dependent on credit history or credit score and hence empowers everyone.

Network Capital Funding

Network Capital Funding is an intuitive loan software that can automate a significant part of the application process. It simplifies managing and submitting all the necessary documents to be approved for a loan. Paperwork has been a bane for borrowers and traditional lenders. It has been one of the reasons why the lending industry operates at a snail’s pace. Network Capital Funding makes it possible to get approved for loans in as few as fifteen days.

Upstart

Upstart is a fintech company that takes into account some pertinent details about an individual or prospective borrower than just focusing on the credit history. A borrower is much more than a credit score. A borrower has an education and a profession, a certain work experience and other strengths. All these attributes are factored in by the algorithm to ascertain if the borrower should be approved for an applied loan. Credit score serves as the foundation of whether or not a borrower is likely to repay. The algorithm used by Upstart focuses on many other factors that actually determine whether or not an individual will repay.

SoFi

This is one of the bigger players in the fintech industry at the moment. The company has already lent more than twenty billion dollars. It is a private company and it may go public in the near future. The company engages with borrowers to improve peer to peer lending. Like Upstart, it has a more holistic view and approach to determine eligibility. SoFi is a coinage of two words social and finance. The company wants to disrupt the traditional notions of lending and it already has shaken up the traditional practices.

Fundera

Fundera is specifically for small to medium enterprises. Business owners have always had a harrowing time to secure loans for commercial purposes. Even moderate sums of money have been hard to come by. Fundera eliminates the need of brokers, reaching out to multiple lenders, filling out numerous forms and then waiting for weeks to learn that their applications have been rejected. Fundera asks a few questions and they take care of everything else. Borrowers would get propositions that are relevant for their needs and one can choose the most suitable lender. The whole lending process has been streamlined and simplified. The resulting process has also become steadfastly expedited.

Unisource

Unisource is a fintech company with a specific objective. It is transforming the way mortgages and other conventional loans work. It is no secret that escrow and title companies have to work with lenders. The involvement of multiple parties demands correspondences and information needs to be vetted by all before anything proceeds to the next logical phase. Unisource is expediting the whole process with centralized information and state of the art machine learning that is automating the different necessary steps. Information about buyers or borrowers is obtained from various sources and the details are aggregated for concerned parties to quickly vet everything and proceed with the approval or subsequent disbursal. Unisource is helping the lenders, the intermediaries or involved parties and the borrowers.

Kabbage is making lending more holistic, much like some of the other fintech companies listed here. Kabbage factors in multiple attributes of a business to determine its eligibility. No single factor becomes decisive as the performance of a business, its assets and prospects, the entire profile becomes the key to getting approved for a line of credit. Kabbage approve businesses based on their real-time business data as their customers connect online and verified businesses sources, tools and technologies for their automated underwriting algorithms to analyze. Further, they approve businesses far faster than 24 hours. The average is only 7 minutes.

Fiserv

The fintech company is actually a developer of various kinds of tools that the lending industry needs to expedite its various processes. The financial tools, automation and other resources developed by Fiserv such as billing software payment processing gateway are aimed at helping both the lender and the borrower. The company is not trying to reinvent or disrupt the traditional industry. It wants to help the lending industry evolve and leapfrog into the twenty-first century. Fiserv offers the techs that the lending industry needs but very few lenders have.

LendUp

LendUp is a fintech company offering line of credit and credit cards. It is not just a lender but also a financial guide. The company offers online courses for free so people can enhance their knowledge and understanding of finance in general and get better at managing their money. LendUp has already approved over one billion dollars in credit and the company is thriving. Clearly, people are listening, reading and understanding what they have to offer.

Oportun

Oportun is into lending but it is neither a bank nor a traditional private lender. The company does not rely on the credit score to consider eligibility. It reiterates that credit bureaus have no other way apart from the credit score to provide any guidance to banks or financial institutions. Since banks and large financial institutions do not entertain applicants who have a poor credit score, private lenders take advantage of that fact and offer loans at extremely high rates of interest. These loans are unrealistic and often people get into debt traps failing to repay the entire loan, primarily owing to the huge interest. Oportun considers several factors other than the credit score to determine eligibility and approves loans but without charging the outlandish interest rates like other conventional private lenders.

These companies are rewriting the rules, reshaping and effectively disrupting the lending industry. Perhaps the banks and traditional financial institutions will take a cue and transform how they operate. As millions of people turn to these fintech companies, the traditional players would have to mend their ways or seize to be relevant.

Steven is a Certified Credit Counselor (CCC) and joined CreditRepairExpert.org in June 2016 as a Credit Repair Adviser to continue his mission of making a difference in the world. Everyday, Steven speaks with individuals and families in the online credit repair community to answers questions and offer help people on their journey to repair their credit rating. If you have a story idea for Steven or you would like help with credit repair, please email him at hello@creditrepairexpert.org.